The latest snapshot of the Australian economy isn't painting a very rosy picture. Current GDP figures show growth is weak and falling behind both economist expectations and reserve bank forecasts. And that's strengthening the case for further interest rate cuts.
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00:00For Vince Perry's carpet and tiles business, times are challenging.
00:06There is a lack of money out there.
00:08There's no money to spend.
00:10Whoever has money is not spending money.
00:12And that's showing up in the official figures,
00:15with Australia on the cusp of another household recession,
00:18where the amount of money spent per person is going backwards.
00:22Well, it does demonstrate that the recovery that we've seen
00:25through the second half of last year and into this year
00:28is pretty sluggish.
00:30Australia's economy barely grew in the March quarter,
00:33up 0.2%, and 1.3% for the year.
00:38It was boosted by household spending on essentials like electricity and gas.
00:42Private sector investment rose, led by housing construction,
00:46mining and manufacturing.
00:48However, the result was dragged down by the biggest pullback
00:51in government spending since 2017.
00:54Australians are also deciding to save more of their money,
00:57driving up the household savings ratio.
01:00With all of the uncertainty in the world,
01:03any growth is a decent outcome.
01:06Donald Trump's on and off again tariffs are driving that uncertainty,
01:10which could lead to more interest rate cuts.
01:13I'm forecasting three more rate cuts before the end of this year,
01:16and part of that is the pessimism that I have on the global economy
01:20with US tariff policy.
01:22There are storm clouds ahead for the Australian economy,
01:25so money markets are predicting a more than 80% chance
01:28of the Reserve Bank cutting interest rates at its next meeting in July.
01:31But if that doesn't end up happening,
01:33a rate cut in August is seen as almost certain,
01:36in order to insulate the economy from the worst of the potential Trump tariff shock.
01:41So, let's look.
01:42Let's look.
01:43Let's look.
01:44Let's look.
01:45Let's look.